Gold Trying to Find a Base (Update 2)

Gold prices slip as the yellow metal searches for a new base of technical support.

NEW YORK ( TheStreet) -- Gold prices are in unfamiliar territory. Prices dipped for the third day in the past four sessions on Wednesday as traders continued searching for a new base of support, following a historic two-day collapse. Gold gained 1.9% on Tuesday.

Gold for June delivery at the COMEX division of the CME shed $4.70 to settle at $1,382.70 an ounce. The gold price traded as high as $1,395.20 and as low as $1,365, while the spot price was adding $4.60, according to Kitco's gold index.

"It's trying to find a base, it's trying to find a place to hold itself, and it will take some time," said George Gero, precious metals strategist at RBC Capital Markets.

Gold's collapse through multiple levels of technical support on Friday and then again on Monday has left traders and investors with little confidence in the yellow metal for the short term.

Many analysts remained uncertain as to whether the deep losses had ended. Gero said it could take weeks or months for the gold to establish a new level of technical support and a fresh trading range.

"We shall confidently say that we will never, ever see a day such as we saw yesterday in the gold market in our lifetime again. It will not happen," Dennis Gartman, editor of The Gartman Letter, wrote on Tuesday.

Gold's fall triggered a selloff in commodities across the board, including a dent to the price of crude.

Gold mining stocks closed mostly lower on Wednesday as the recent sell-off in paper markets raised questions about how mining companies would fare in the face of significantly reduced prices for an ounce of gold.

"So, similar to oil and other commodities, it costs some mining companies anywhere from $1,200 to $1,400 to get an ounce of gold out of the ground, whereas other companies, that cost might be $700 to $800 or half of that," Rhind said.

Rhind said you can look at gold dipping near the marginal cost of production for miners as being a firm support level for the paper markets.